Esther Ang asked 8 months ago
Hi there,
Attached is a snapshot of CDG\'s key ratios for last 9 years. A clear observation is that while the ratios are trending in a positive manner post Covid, they are still worse off compared to pre-Covid years. Is this due to a shift in their focus to more overseas markets? Is this a cause for concern? Thank you!
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1 Answers
Darren Yeo Staff answered 8 months ago
Hi Esther,
I think it is mainly due to structural shifts at home rather than the mentioned overseas dilution. First, the Bus Contracting Model (rolled out back in 2016) pays operators a fixed service fee, which steadies but compresses margin; the New Rail Financing Framework (v2) from 2022, which has an EBIT cap, also limits the potential upside even as ridership normalises. Second, the taxi business was structurally changed by ride-hailing also, fleets continue to shrink, pressuring profitability, but the company is also trying their best to compete with their ride-hailing app. I would think overseas expansion has helped rather than hurt the company. The management also mentioned that their overseas contract has better margins, which supports a gradual recovery in the group.
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